Trade, economy, and pro-Russian opinion in Georgia

According to a recent survey by the U.S. National Democratic Institute, support for membership in the Russia-led Eurasian Economic Union (EEU) has doubled in Georgia since 2014, to 31 percent. Simultaneously, support for the trade agreement between Georgia and the EU fell from 80 percent before the Ukraine crisis to 68 percent in April 2015. Many commentators have linked this development with a temporal disappointment among Georgians with the country’s slow western integration following the Eastern Partnership (EaP) summit in Riga. Others stress the Russian “soft offensive” on Georgia conducted through Russian-sponsored media and NGOs. However, the underlying reasons for why increasing numbers of Georgians become receptive to demands for reorienting the country towards Russia may be deeper, less temporal and much more serious.

BACKGROUND: The rejection of visa liberalization for Georgia during the EaP summit in Riga was received bitterly among the country’s public and elites. Yet it was just one in a series of disappointments that Georgians had to swallow in recent years. For example, in a March 2014 speech, President Obama downplayed Georgia’s prospects as a future full member of NATO. In order to become part of the West, Georgia has sacrificed 29 soldiers in NATO operations, as well as the prosperity of several regions dependent on trade with Russia. These disappointments have most likely influenced the shift in public opinion to some extent, but without other factors and cleverly presented alternatives, their impact would likely have been temporary.

Yet pro-Russian and anti-Western rhetoric has started to take root in some Georgian media and social networks. Several organizations, such as the Eurasian Institute, Global Research Center, People’s Orthodox Movement and Eurasian choice, accompanied by various information agencies and web news such as geoworld.ge, isari.ge, TV Company DRO and Patriot TV univocally criticize what they view as western decadency and instead promote a reorientation towards Russia. Most of these “pro-Russian” soft power initiatives have existed for some years, but their influence on Georgian society remains limited. More worrisome and largely overlooked are the masses held in Orthodox churches around the country, often providing locals with similar messages to those voiced by pro-Russian NGOs.

Both disappointment with NATO and the EU, and Russian influence via soft power can to some extent explain shifts of Georgian pubic opinion. However, various surveys conclude that ordinary Georgian families do not consider slow integration with the West an immediate problem. Instead, they view issues such as unemployment and high prices as primary concerns.

The exclusion from the Russian market, designed as a punishment for the country’s pro-western orientation, dealt a significant blow to Georgia’s economy. This is especially valid for regions such as Shida Kartli or Kakheti, which remain dependent on trade with Russia. Thanks to their proximity to the Russian market, small family producers in these regions kept comparatively high living standards in the 1990s despite civil wars and a crumbling economy. The closure of the Russian border threw thousands of rural families in Georgia below the poverty line, basically from one day to another. At that time, it was viewed by many as a price for Georgia’s integration with the West and the anticipated prosperity linked to it. Now, however, some families who doubt that they will be able to sell the production of their small orchards on European markets, start to long for an open border and renewed trade with Russia.

IMPLICATIONS: Theprospect of similar shifts of Georgian public opinion have been observed in a local context, as a result of socio-economic hardship in areas that could previously attain some level of socio-economic stability thanks to trade links with Russia (see the 01/07/2015 Issue of the CACI Analyst). These trends may now start to appear on a national scale. Georgians hoped that the signature of a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU on June 27, 2014 would significantly boost agricultural production, as well as exports to the EU. Such expectations were massively supported by Georgian elites. Experts agree that in the long term, the DCFTA can improve the standards of Georgian production and grant ordinary Georgians access to higher quality EU products. However, regarding increased exports to the EU, roughly half Georgia’s workforce is employed in agriculture, which is based on small and often barely surviving family businesses. In this context, the DCFTA requires approximately 350 directives, which Georgian agricultural producers, lacking capital for any additional investment, can hardly meet. It remains questionable whether the announced 8-year implementation plan proclaimed by the Georgian government will help mitigate this situation.

It should also be recalled that the DCFTA works for both sides. It not only implies that the EU opens its market to hardly competitive Georgian products, but Georgia might also face an onslaught of highly subsidized EU products on its market. In result, the DCFTA will increase mutual trade between EU and Georgia, but it may also increase Georgia’s negative trade balance and increase the competition for local producers. Exports from Georgia to the EU actually decreased between January and May 2015. Presently, many Georgian farmers feel threatened by EU agricultural products as a result of the DCFTA rather than seeing potential in new markets.

Part of Georgia’s problem as an agricultural country is its geography. Most of Georgia’s important trading partners have regions with similar natural conditions and produce similar agricultural goods. Most of its trading partners, including the EU, Turkey and Azerbaijan, have more developed and efficient agriculture and often tread out Georgian producers even from their domestic market. Only Russia does not produce similar agricultural products in the quantities needed to saturate its market, which is craving for Georgian products. Disappointed with the DCFTA, many Georgian farmers are becoming increasingly nostalgic of the Russian market. Under these conditions, Moscow has launched an offensive on several fronts against Georgia in order to win the support of its citizens, as well as its government.

Besides its soft power campaign, Moscow has in recent years sought to illustrate the gains of cooperation to Georgians. In late 2013, the Kremlin lifted the ban on Georgian wines and mineral waters for large Georgian producers. Within months, exports of these commodities skyrocketed thanks to the Russian market. As Georgian exporters got used to this new reality, Moscow regained some of its economic leverage on Tbilisi. Indeed, following Georgia’s signature of the DCFTA, Russia terminated the trade agreement with Georgia and recently renewed its ban on some Georgian wines and brandies, allegedly due to low hygienic standards. Hence, despite bold statements by some members of the Georgian elite about continuing Georgia’s reorientation away from Russia and towards new markets, Moscow - unlike the EU – has both a carrot and a stick at its disposal when dealing with Tbilisi. These tools are becoming increasingly effective as the socio-economic situation in Georgia keeps deteriorating. Through its media and NGOs, Moscow seeks to market cooperation with Russia to the Georgian public as the solution to the most significant socio-economic problems without “lengthy and humiliating” integration into western structures.

A signal that should not be overlooked is the voices calling for closer integration with Russia, which have emerged in Georgia’s politics. Such ideas are not only voiced by marginal movements, but also by established figures such as Nino Burjanadze or Gogi Topadze, both of whomcall for a change in the country’s foreign policy and for a reorientation towards Moscow. In the face of a depreciating national currency, a worsening socioeconomic situation and the absence of miracles linked to the DCFTA, pro-Russian rhetoric may find its way into the political mainstream before the parliamentary elections scheduled for 2016.

CONCLUSIONS: None of the above implies that Georgia is destined to once again end up in Russia’s orbit, or that Georgia’s integration with the West has brought no significant benefits for the country. However, it appears that the slight shift in Georgian public opinion towards Russia is not an artificial or temporal result of disappointment with slow western integration in combination with an intensified Russian soft power offensive in the country. The factors behind this shift appear to be deeply rooted in the frustrating socio-economic realities of many Georgian villages and small towns. And these realities, if not properly addressed by both the EU and the Georgian government, could soon tilt Georgian politics in the Kremlin’s favor.

AUTHOR’S BIO: Tomáš Baranec is a graduate of Charles University in Prague. His research interests include nationalism and factors of ethnic conflicts and separatism in the Caucasus. He works at the Institute of Security and Defence Studies (Armed Forces Academy) in Bratislava.

The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.